HDFC Bank Ltd shares closed Monday's trade nearly 1 percent lower despite the stock's bullish start following the December quarter earnings announcement.
The stock was trading 1.21 percent higher on the bourses in early trade, however, it slipped into the red zone around noon. According to analysts, the stock witnessed profit booking as good results were already discounted in the price. Nevertheless, the overall bias on the stock is positive.
The private bank on Saturday reported a 19.9 percent increase in the net profit at ₹12,698 crore for the quarter ended December owing to a strong growth in core revenue.
As per an exchange filing, the private bank's post-tax earnings increased by 18.5 percent to ₹12,259.5 crore from the same time last year.
Due to a growth in advances of 19.5 percent, the core net interest income increased by 24.6 percent to ₹22,987.8 crore. In comparison to the September quarter, the bank's net interest margin remained steady at 4.1 percent.
On the asset quality front, as of December 31, 2022, the gross non-performing assets ratio remained constant at 1.23 percent.
What do brokerages recommend?
According to brokerage house ICICI Direct Research, the HDFC Bank share price has grown more than 25 percent in the past three years. The brokerage has 'buy' rating on the stock and remains bullish.
"Building of distribution capabilities and business growth to remain buoyant though merger with HDFC Ltd to remain in focus in the near term," added the brokerage.
Brokerage house Emkay Global Financial Services Ltd believes that the private bank offers the best play on India’s consumption story and is also a good defensive bet in the current volatile market.
The brokerage has a 'buy' rating for the stock.
Brokerage firm Nirmal Bang expects earnings growth to remain strong but is cautious about merger transition, which along with elevated operating expenses (opex) and margin trajectory, would be key monitorables going forward. The brokerage too has a 'buy' rating on the stock.
Prabhudas Lilladher Pvt Ltd has upgraded FY23 earnings by 3 percent led by higher net interest income (NII) and lower provisions. As the bank has added 684 branches in Q3FY23, and intends to add 600 more branches in Q4FY23, the brokerage believes that it would keep opex elevated.
The brokerage has a 'buy' rating on the stock.
